Modern central banking from monetary perspective

Abstract:
Motivation: Cashless or DSGE models did not allow to predict the Great Recession — which may suggest that they omit some important variables like money or credit, for instance. Aim: The paper summarizes changing views on money’s importance in modern monetary policy and reviews pros and cons of assigning any special role to money by central banks. Results: On the basis of literature review and the 2007–2009 crisis experiences, author apposes arguments for possible improvements in monetary policy frameworks. The paper is organized as follows: section 1 reviews some basic facts about monetary aggregates, section 2 presents the methodology of the research, section 3 discusses pros and cons of assigning special relevance to money in central banking, section 4 concludes.